Digital Transformation Top Priority for Asset Managers

A Change in Focus

The research highlights that the industry is undergoing a shift away from a product-centric view to a focus on the client. In doing so, spend is moving away from areas such as reg-tech solutions – towards investing in customer experience and the overarching design of the business. This is helping to “future-proof” firms for broader industry changes.

85% of respondents said that improved client engagement was a key benefit from digital transformation. This is highly correlated with driving increased revenue and AUM. An improved client experience is seen to be key in winning new mandates and engaging distribution partners as well as retaining customers. Firms are looking to achieve economies of scale and in doing so need to adopt digital approaches and work collaboratively with sales teams to manage a wide range of client types.

Research from Alpha FMC, the asset and wealth management consultancy, finds that many firms (80%) are prioritising their digital transformation, with 61% stating that they are “getting organised”. However, nearly a quarter (23%) feel that their digital maturity is “frustratingly fragmented” and that they are beginning to lag behind other organisations.

Alpha FMC surveyed 15 of the largest global asset management firms, collectively managing over £7 trillion in AUM. Respondents included a mix of CMO’s, Digital Directors, Chief Digital Officers and Technology Leaders. Eight respondents feature in the Investment Association’s top 40 asset managers by AUM and ten feature in the top 200 of IPE’s top 400 global asset manages by AUM.

Digital Spend

The spend and resources allocated to digitisation differs significantly across the industry and is correlated to each firm’s stage of digital maturity. Some firms will be focused on developing their strategy and business design, whilst others have moved into delivery mode. For many asset managers, “getting organised” is characterised by having a nascent digital strategy and beginning to allocate budget and resources to foundation level capabilities and technology. The research found that the average amount asset managers are spending on digital each year is £15 million but there was a wide spread up to £50m and above.

Whilst FinTech is a hot topic, many asset managers are not yet fully involved with the FinTech community given the risk and upfront cost of investing in companies and proprietary software.

Kevin O’Shaughnessy, Head of Digital, Alpha FMC

The FinTech Question

Whilst FinTech remains a topic of interest, few firms are actively involved – either through acquisition or substantive partnerships – but most are looking to this sector to pave the way with new technologies and provide inspiration so that they can ”follow fast” once technologies become more mainstream.

No asset manager felt the need to become a digital innovator themselves, and the majority (69%) have not invested in FinTech platforms and do not have plans to do so. Only 15% said they were focused on identifying and integrating FinTech solutions which range from robo-advice, AI and educational platforms.

The research suggests that over the next three to five years, asset managers will turn their attention away from more traditional digital platforms such as data management, cloud services and social media and focus instead on more innovative technologies like artificial intelligence, machine learning and blockchain.

Organisations invested in external FinTech or digital propositions

Currently only 8% of firms have a blockchain development plan in progress, compared with 31% which have a robo-advice platform.

About the Author

Simon is a Manager at Alpha and leads marketing, insights and thought leadership initiatives within the Alpha Digital practice. He has consulting experience across the change management lifecycle from strategy to definition, translation and delivery. This includes TOM development, process design, technology POCs, implementations, business strategy/case development as well as developing and building new teams.

Kevin is a Director at Alpha and leads our Digital & Agile practice. He has over 20 years experience of driving digital transformation across the Financial Services Sector and in particular in the Wealth and Asset Management space. His experience covers the full range of digital topics which he has deployed across a mix of channels including Direct to Consumer, Intermediated and platforms.